ERC raises legal concerns about Energy department’s net-metering draft

ERC 071118 - ERC raises legal concerns about Energy department’s net-metering draftPHILSTAR

THE Energy Regulatory Commission (ERC) raised legal questions on the Energy department’s draft circular on net-metering, including inconsistencies with existing laws, while pointing out that the regulator is the entity with the mandate to issue rules and regulations.

“Upon perusal of the draft department circular, we were of the opinion that there are possible legal impediments in the implementation of the DoE circular. The cross cutting concerns of energy security, affordability, and reliability also needs to be considered and addressed,” said ERC Chairperson and Chief Executive Officer Agnes VST Devanadera in a statement Tuesday.

Net-metering allows ordinary electricity consumers with their own power generation to sell their excess capacity to the distribution grid.

The ERC said it has written the Department of Energy (DoE) to express its views on the draft circular, which it said should be made applicable to all types of renewable energy (RE) resources and not just focused on a certain type of technology or resource.

The DoE in October asked interested individuals and renewable energy stakeholders to comment on the draft entitled “Policies to Enhance the Net-Metering Program for Renewable Energy Systems and Other Mechanisms to Ensure Energy Security.”

The ERC said three “possible legal drawbacks” could arise out of the DoE’s draft circular.

First, the multiple compensation mechanism as proposed, is not consistent with the provisions of Republic Act (RA) No. 9513 or the Renewable Energy Act of 2008, and RA 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).

Second, Section 6 (Own-Use RE Systems with Above 100 kilowatt (kW) capacity) and Section 7 (Own-Use RE Systems as Emergency Supply Option) are not supported by the express provisions of the RE Act.

Third, the responsibilities imposed upon ERC under Section 11 have been addressed with the promulgation of the amended net-metering rules.

The ERC said the use of the retail rate as one of the compensation mechanisms, as opposed to the use of the blended generation cost that the ERC adopted in its recently promulgated amended net-metering rules, would increase the generation cost of the distribution utility through the net-metering program.

It said its comment was based on the simulation it conducted on the impact of using the retail rate as the price of export at different levels of net-metering penetration.

It said the resulting retail rate of P13.8528 per kilowatt-hour (kWh) at the 30% maximum net-metering penetration level is even higher than the last feed-In tariff (FiT) rate set at P8.69 per kWh. The higher rate runs contrary to the EPIRA’s policy to provide the least cost power options to captive consumers, it said.

The ERC also said that it has the mandate to issue rules and regulations pertaining to net-metering and that it had fulfilled that mandate in its promulgation of the net-metering rules in 2013 and the amended net-metering rules in October 2019.

It said the amended rules sought to improve the interconnection set-up to take advantage of new technologies and to implement the Renewable Portfolio Standards (RPS); simplify permitting procedures; reduce installation soft costs; minimize the rate impact to non-net-metering customers; address the subsidy impact on the non-net-metering customers; rationalize entitlement to the lifeline subsidy rate; and implement a stringent reporting process.

Ms. Devanadera said the commission fully supports the development of the RE program, and that it commends the DoE for coming up with its draft department circular that seeks to encourage and promote electricity end-users participation into the net-metering program.

“The department circular, however, should not veer away from the confines of the law that it seeks to implement,” she said. — Victor V. Saulon

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